Loans for hard-to-qualify borrowers are back
By JEFF LAZERSON / CONTRIBUTING COLUMNIST
Hold onto your hat because I have the mortgage financing hoedown of all hoedowns to tell you about.
Last weekend I attended NAMB National (National Association of Mortgage Professionals) the mortgage broker’s annual Las Vegas conference. Mortgage brokers work similarly to the way insurance brokers work.
Mortgage brokers shop to provide a menu of the best mortgage pricing and programs to meet the needs of their clientele, the purchase and refinance mortgage shopping public.
Wholesale mortgage lenders cater to mortgage brokers as the funding sources. They can be depositories such as banks and credit unions, non-bank lenders and even private investors.
Wholesale lenders come to these conferences in force so that mortgage brokers can learn more. Some of their products were crushingly good. Others had me gushing. And, even others had me blushing. Talk about feeling like a kid in a candy store.
Here are the top five new loan programs that I found from wholesale lenders:
1) Put 10 percent down on an owner-occupied property. Qualify using 24 months of your personal bank statements as your income for self-employed borrowers. Go down to a 620 middle credit score. Nice!
2) Put 25 percent down and get a home loan where you don’t put any income down on the application. This is named a no-income home loan. Holy Toledo!
3) Using the lowest middle FICO score of all borrowers is so old school. Instead, average the borrowers’ middle FICO scores and use that average score to price out your conventional Freddie Mac rates.
Example: Borrower number one has a 740 FICO and borrower number two has a 630 score. The average score is 685. This is hugely better pricing than using the lowest middle score of 630, maybe0.25 percent or more difference in rate. Or, even the difference between approval and denial.
4) Been out of the work force for awhile? Or a long, long while –like 10 years or more? Don’t fret. You earned yourself a well-priced conventional loan.
As long as you’ve worked in a salary or hourly position for two years before you left the workforce, we can use your new income from your new hourly rate or salary job on your very first day back to work. You do not have to go back to the same line of work you were in. Oh my goodness!
5) Condo litigation or non-warrantable condo for Fannie Mae approval purposes? Don’t lose any more sleep over those issues. Lenders are lining up to sign you up.
Jeff Lazerson - Mortgage Columnist since 2011